Laredo Petroleum, Inc.

Good day, ladies and gentlemen, and welcome to Laredo Petroleum Inc.' 's fourth quarter 2021 earnings conference call. My name is Shannon, and I will be your operator for today. At this time, all participants are in listen-only mode. We will be conducting a question-and-answer session after the financial and operations report. As a reminder, this conference is being recorded for replay purposes. It is now my pleasure to introduce Mr. Ron Haygood, Vice President of Investor Relations. You may proceed, sir.

Thank you and good morning. Joining me today are Jason Paget, President and Chief Executive Officer, Karen Chandler, Senior Vice President and Chief Operations Officer, and Brian Limmerman, Senior Vice President and Chief Financial Officer, as well as other additional members of our management team. During today's call, we'll be making forward-looking statements. These statements, including those describing our beliefs, goals, expectations, forecasts, and assumptions are intended to be covered by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Our actual results may differ from these forward-looking statements for a variety of reasons, many of which are beyond our control. In addition, we will be making reference to non-GAAP financial measures. Reconciliations to GAAP financial measures are included in the two press releases and presentation we issued yesterday that detail our financial and operating results for fourth quarter and full year 2021, as well as our 2022 capital budget and outlook. These press releases and presentation can be accessed on our website at www.laredopetro.com. I will now turn the call over to Jason Paget, President and Chief Executive Officer.

Thank you, Ron. Good morning, and thanks for joining us today. We performed exceptionally well in 2021, safely navigating the second year of a global pandemic, capturing important acquisitions that extended our inventory life and making great strides to improve our balance sheet. Our results were quite strong, and our strategy to create future value for our shareholders is well-defined and on track. Our fourth quarter 2021 results were outstanding. Both total and oil production were above the top end of guidance. We generated $25 million of free cash flow and adjusted EBITDA of $182 million. During full year 2021, first, we materially increased our runway of high-return, oil-weighted drilling locations. We were able to identify and capture two significant acquisitions that fit us perfectly, adding more than 40,000 acres in Howard and western Glasgow counties. These deals were accretive to shareholders and deleveraging. These deals initially added about 250 locations, but importantly, recent drilling success has added an additional 125 locations across areas where we ascribed no value at the time of the acquisition. We now have eight years of oil-weighted, high-margin inventory in Howard and Western Glasgow counties. Second, we grew approved oil reserves by nearly 80%, and oil now makes up nearly 40% of our total reserves. The benefits of increased oil reserves paired with the sale of lower-margin gas-weighted assets is apparent in our margins and a 260% increase in the SEC PV10 value. At a WTI price of $75, more reflective of the current environment, we estimate our reserve value would increase by almost $1 billion from the SEC PV10 to approximately $4.6 billion. Third, we significantly improved our capital structure through the reduction of leverage and increased liquidity. We issued $400 million of senior notes at an attractive rate and raised $73 million through the issuance of common stock through our ATM program. Our investments have been disciplined, allowing us to reduce our 4Q annualized net debt to adjusted EBITDA ratio to 1.9 times at year-end 2021, compared to 2.4 times a year ago. Lastly, we continued to demonstrate our commitment to ESG and issued comprehensive ESG and climate risk reports with data through year-end 2020. We established meaningful targets to reduce greenhouse gas and methane emissions, as well as the elimination of routine flaring by 2025. We understand shareholder expectations for our industry, and our board, management team, and other employees are committed to leading the way. We aligned the board oversight responsibilities for ESG and appointed a chief sustainability officer, referring directly to me. Additionally, we included EEO1 data in our 2021 ESG report, providing clarity into the diversity of our workforce. Our 2021 achievements provide a strong foundation for 2022. Yesterday, we issued our outlook for this year, which aligns with our focus on capital-efficient investments, the generation of free cash flow, and the continued strengthening of our balance sheets. Our leverage reduction is six months ahead of previous expectations of year-end 2022, benefiting from higher commodity prices. We are quickly moving toward a time when we will be able to return significant cash to shareholders. We are excited about 2022 and the financial and operating opportunities that we see in front of us. We expect to generate about $300 million in free cash flow in 2022 at the current commodity prices. To put this in perspective, that is about one quarter of our market cap today, And over the next two years, we see the opportunity to deliver free cash flow equivalent to half of our current market cap. We understand the importance of leverage reduction. $300 million of free cash flow is equivalent to about $17 per share. We believe that paying down debt is the most shareholder-friendly initiative that we can deliver today. We expect our leverage ratio will be 1.5 times by the third quarter, and we have line of sight to one times by mid-year 2023. Our capital investments are disciplined and are being allocated to our best opportunities. We are fortunate to have a strong portfolio of high-return oil projects in the U.S.' 's premier oil basin. We are maintaining our capital discipline, keeping activity levels flat from 2021, keeping oil production approximately flat from our Q4 21 exit rate. From the field to the office, our people are dedicated to delivering results that will build value for our shareholders. I will now turn the call over to Karen for an operations update.